Edinburgh's Cairn Energy takes decisive action to navigate choppy waters

Cairn Energy, the Edinburgh-headquartered oil and gas explorer and producer, has given an upbeat outlook despite posting hefty first-half losses.

By Scott Reid
Tuesday, 29th September 2020, 12:29 pm
Simon Thomson is the chief executive of Cairn Energy, the Edinburgh-headquartered oil and gas explorer and producer.
Simon Thomson is the chief executive of Cairn Energy, the Edinburgh-headquartered oil and gas explorer and producer.

The FTSE-250 firm booked a loss of $324 million (£252m) for the period after it was hit by a $240m impairment charge, largely relating to its assets in Senegal. There was a charge of $33m made against Cairn’s UK producing assets.

However, the group said that it had safely navigated the coronavirus crisis and lower oil prices and was well placed to generate future growth.

Chief executive Simon Thomson told investors: “We have successfully managed the business through a challenging external environment, always ensuring that the safety of our people is paramount.

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“We took early action with significant reductions and deferrals to the capital programme. Alongside the sale of interests in both Norway and Senegal, we have realigned the portfolio and demonstrated Cairn’s continued commitment to shareholder returns.

“With a strong net cash position and limited capital commitments, Cairn is well-positioned to deliver further value for shareholders.”

It reported an average net production output of 22,400 barrels per day, at the top end of its full-year guidance.

Barclays analyst James Hosie noted: “H1/20 feels a long time ago, but Cairn’s financial performance was ahead of Barclays’ forecasts due to higher price realisations and the pending sale of its Senegal portfolio is set to further strengthen the already debt-free balance sheet. FY20 guidance tweaks are consistent with our existing forecasts. In the absence of new news, we expect the market to focus on the Indian arbitration process.”

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